Does The Monetary Policy Matter In A Multiple Currency Economy? Zimbabwe’s Experience

Abstract

This paper seek to establish the role of monetary policy in stimulating economic activities in Zimbabwe during the multiple currency era for the period 2009-2020. The study analyzed secondary time series data collected from RBZ, CSO and IMF publications. Data was tested for stationarity using the Augmented Dickey Fuller test and later the Johansen Cointegration test and Vector Error Correction Model were employed to determine long-run and short-run dynamic. The findings show positive influence of money supply, interest rates and the consumer price index of inflation on economic activity. The study therefore recommends that the government should monitor levels of inflation, develop policies to promote exports and employ fixed exchange rate to influence economic activity in Zimbabwe.